Transnet in bid for $400m recap of Zim railways

Harare –  Transnet will know by July 14 if its bid for an investment into the National Railways of Zimbabwe (NRZ) has been successful, after it submitted bid documents to the State Procurement Board on Tuesday.

Source: Transnet in bid for $400m recap of Zim railways | Fin24

Transnet is bidding for the $400m recapitalisation of NRZ, together with five other companies. These include China Civil Engineering, Sino Hydro, SHM Rail of Malaysia and Croyeaux Ltd.

“We are very happy with the response (and) we hope that within the next 10 days we will have a position as to who will have come out tops in terms of a strategic fit and also being able to provide the necessary funding requirements,” NRZ chairperson Larry Mavhima said in Harare on Tuesday.

Mavhima said the board is looking at a total recapitalisation plan for NRZ and the rearrangement of its balance sheet.

“It’s not an easy tender as such – we want the recapitalisation and modernisation of NRZ,” he said.

NRZ is hobbled by under-capitalisation and has been making losses as most of its locomotives have been grounded.

In the year to end-December 2016, NRZ incurred a net loss of $59.7m compared to a loss of $40.8m in 2015. This bloated NRZ’s cumulative loss for the period to $336.2m after its net current liability position widened to $219m.

Zimbabwean auditor general Mildred Chiri said in a report on NRZ released last month that the company has long outstanding prepayments made to suppliers amounting to $1.4m, which raises the risk of financial loss.

The bidding process from the six companies that submitted tender documents on Tuesday will be completed after 10 days, according to officials. NRZ is seeking to raise $400m in recapitalisation funds.

Zimbabwe has long stalled on privatisation of its loss-making parastatals and this has seen most state-owned firms run up losses, with employees often not being paid their salaries amid mounting debts to service providers.

NRZ board said it is open to all forms of investment partnerships as the bidding process for recapitalisation enters adjudication.

“We are open to any investment, whether it is in the form of debt or equity. There is no preference, but what we want is something that is functional for NRZ,” added Mavhima.

The Zimbabwean sole railways operator is a crucial player in moving raw materials into the country, as well as finished products destined for international markets. The poor state of the railway system and network has overburdened Zimbabwe’s roads network, as companies now have to move goods by road.

Officials say the recapitalisation impetus will help breathe fresh capacity into the firm and enable it to move as much as 14 million tonnes of freight per year. The company set itself the target of moving just 3.7 million tonnes this year.